What is meant by "co-investment" in private equity?

Co-investment in private equity refers to a strategy that allows limited partners, such as institutional investors or high-net-worth individuals, to invest directly alongside a private equity fund in a specific deal or investment opportunity. This mechanism enables limited partners to participate directly in the equity of a company that the private equity fund is acquiring or investing in, thus providing them with the opportunity to achieve potentially higher returns on their investment.

Co-investment is typically beneficial for limited partners as it allows them to increase their investment exposure in chosen deals without incurring additional management fees that would usually be associated with investing through a fund. Additionally, it helps to align interests between the private equity firm and its investors, fostering a more committed investment environment.

The other options reflect different concepts unrelated to the specific function and definition of co-investment in the context of private equity. For example, the ability of general partners investing in their own fund represents a different aspect of fund management and investment alignment, while community investment programs and securing government grants pertain to entirely different sectors and strategies outside the realm of private equity co-investment.